Group Readies Legal Challenge To Casino Deal

Lake Investors Opposing Rosemont

Lake County casino investors are poised to ask a judge this month to block the planned Emerald Casino in Rosemont.

The legal tactics of Lake County Riverboat L.P. seem certain to call more attention to the political dealmaking behind legislation that gave the nod for the Rosemont casino to Chicago-based HP Inc., now called Emerald Casino Inc.

The Lake County group is challenging the law passed in May as impermissible "special legislation" designed to favor a select group for no legitimate reason.

The Illinois Gaming Board is scheduled to meet Oct. 26 on Emerald's application to operate in Rosemont. If the board tries to grant the license, the Lake County investors are prepared to ask a judge to issue an injunction to stop the move, said Michael Dockterman, attorney for Lake County Riverboat L.P.

"Trying to grant a license to anybody" under the law would violate the state constitution, Dockterman said. "A brand new competitive process should start, which I'm sure is what would have happened had the legislature not passed" the new law.

Lake County Riverboat and related companies have been fighting for years for permission to build a casino and hotel complex in Fox Lake.

Last week the Lake County investors, led by Glenn K. Seidenfeld Jr., filed a lawsuit in Lake County Circuit Court asking a judge to overturn Illinois' new gambling law.

The original law, passed in 1990, established the Gaming Board to evaluate applicants for gambling licenses. But the latest version says that if a company holding a gambling license and not conducting gambling as of Jan. 1, 1998, applies to move to a new location, the board "shall grant the application."

Rivals claim that phrasing handed HP Inc. the right to relocate in Rosemont, since HP was the only licensee not operating at the time.

Meanwhile, Lake County Riverboat applied to the Gaming Board for a license in late 1997. So on Jan. 1, 1998, "there were two applications pending and the legislature chose one of them" without going through a competitive process, Dockterman said. "That's special legislation."

Yet in 1994, the court approved a law that granted three counties--DuPage, Kane and McHenry--the right to impose a motor-fuel tax.

That the new gambling law appears to target one company doesn't make it unconstitutional, said Ron Rotunda, a law professor at the University of Illinois.

Still, "the fact that it excludes all this competition is not a plus," Rotunda said. Courts will be bound to ask: "What's the reason for it?"

If a court finds nothing but political favoritism, the law could be in trouble, Rotunda said. "I think one of the purposes of the (special legislation) provision was to prevent the legislature from passing out monopoly powers based on campaign contributions."

In 1997, the Illinois Supreme Court struck down a portion of the state's tort reform law as impermissible special legislation. The law had capped compensatory damages for non-economic injuries--such as pain and suffering--at $500,000. The distinction was arbitrary, the court said.

"With that kind of precedent, I'm pretty happy," Dockterman said.

Illinois Gaming Board Chairman Robert Vickrey said the Lake County group's lawsuit would have no immediate effect. "We've not been enjoined by the courts, and until we are, we're going to continue to march," he said.

HP Inc. has been one of 10 groups licensed to conduct riverboat gambling. In 1997, it shut down its Silver Eagle riverboat in East Dubuque after five years of operation.

The company, led by Eugene Heytow, chairman of Amalgamated Bank, and Donald Flynn, founder of Waste Management, was litigating over the future of its license when Gov. George Ryan signed the new gambling bill in June.

Company officials could not be reached Wednesday for comment.

Gary Mack, spokesman for the village of Rosemont, says Mayor Donald Stephens remains confident the law will withstand the challenge.

But Seidenfeld is nothing if not persistent. He has been battling for a casino in Lake County since at least 1992.

In the lawsuit, his group also has attacked provisions for minority investors to own at least 16 percent of the Rosemont casino and women investors 4 percent.

"I'm going to attack the statute on every constitutional ground I can," Dockterman said.